Vendor File Cleansing – Fresh and Clean Supplier Data
Benefits of Vendor File Cleansing
Vendor File Cleaning is fast becoming a necessary on-going process rather than a nice-to-have once in a while project.
The bigger your company gets, the greater are the chances that your vendor master file will become filled with missing, outdated, inconsistent information, duplicate files, and other problematic vendor related information under the same corporate umbrella. One particular term has gained immense popularity in this field. It may be a little too strong to use, but the clarity to the problem it brings just can’t be ignored. „Dirty“ vendor data can become a serious problem for large companies, which have to deal with the overwhelming data input of tens or even hundreds of thousands of different vendors on a daily basis. All of these has to be processed in multiple systems, across multiple and various business units, and finally, managed by different staff. Now, imagine how this problem can explode when an organization has to go through the “merger and acquisition” process with some other company that also experiences these problems.
“Dirty” vendor master files can cost organizations millions of dollars in different lost revenues, such as:
- Higher costs associated with duplicate payments
- Increased operational risks
- Missed discount cash opportunities
- Missed volume rebates
- Fraudulent and non-transparent payments
- Regulatory non-compliances
That’s why cleaning up an organization’s vendor master file is an absolute must, rather than an option for large corporate entities. On the other side, we have to mention benefits you can expect your company to gain, once you decide to go through vendor master files clean up:
- Elimination or serious decrease of duplicate payments: Vendor master file cleanup can eliminate, or at least seriously decrease the number of duplicate vendor files and issues that are associated with the duplicate payments.
- Reduction of fraud related problems: According to the findings of the Association of Certified Fraud Examiners it is estimated that an average of at least 5% of company’s revenues has been lost due to fraudulent payments on a yearly level. Cleaning, updating, and maintaining the vendor master files ensure the transparency and control necessary to help reduce unwanted fraudulent financial scenarios.
- Improved staff productivity: To have your vendor files successfully cleaned means allowing your staff to find vendors in your system more easily. In addition, clean vendor files make it a little bit harder for your staff to create duplicate vendor records. In addition, your staff will definitely not waste their precious time dealing with files that should already have been deleted.
- Improved spending analysis and management: By allowing you to identify which vendors belong to the same corporate entity, your vendor master cleanup operations can help you improve spending analysis and management for your company. You’ll be able to negotiate better discounts, payment terms, and manage better the debit balances.
- Streamlined regulatory compliances: The best way to ensure your company’s compliance with regulations and necessary internal controls is to go through the process of vendor master file data cleanup.
- Reduction of costs: When being compared to traditional and manual processes, a thoughtful and ongoing vendor master data cleanup and maintenance program can significantly reduce the costs associated with the management of supplier information.